Gold’s Critical Position: Inside Day Down Raises Retracement Concerns

Gold Forecast Video for 11.01.24 by Bruce Powers

Gold triggers an inside day down on Wednesday, as it drops below Tuesday’s low of 2,026. And it is on track to close below that level. Nevertheless, it continues to trade within Monday’s trading range of 2,017 to 2,047. Those are the two key near-term price levels to signal either strength or weakness. The low on Monday completed a 61.8% Fibonacci retracement and subsequently found support there. That’s just above the 50-Day MA, which is now at 2,012.

Three Days Below Line Shows Weakness

Today’s close is set to see gold below the uptrend line for the third day in a row as it consolidates within Monday’s price range. This leaves it in a precarious position that increases the risk that a deeper retracement may be in the works. In addition to closing below the line on multiple days, the 20-Day MA has acted as resistance the past couple of days. A downtrend progresses by breaking below support then returning to test the same or similar price levels as resistance. Once that happens the chance that prices will continue to fall increases.

Lower Support Levels on Deck

Potential support at the 50-Day line is nearby. If it continues to hold as support the bullish near-term outlook in gold can be maintained. If not, it looks like gold could head to the 78.6% retracement at 1,998 or fall further down to the prior swing low at 1,973 or the 200-Day MA at 1,963. Also, to consider is the December monthly low that matches the prior swing low at 1,973 thereby potentially strengthening the support around that price area.

Integrity of Rising Trend Channel at Risk

This week’s decline is testing the integrity of the rising parallel trend channel. A daily close below the 50-Day line will confirm a violation. At the same time a breakout above today’s high of 2,040 is a sign of strength and potential bullish reversal. While it would also put gold back above its 20-Day MA. The two-day high is then at 2,042, followed by the three-day high at 2,047. Although the lower levels show strength, a breakout above the three-day high will be more significant as it will better forecast a continuation higher.

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